BTPs lead the way this morning

The rally in BTPs has been the story of the morning. There have been some big buy orders in both the cash and futures markets that have helped push BTPs higher with some speculation that the orders may be ahead of the S&P Italy rating decision which is due after hours tonight, hoping for the BBB negative outlook rating to remain unchanged.

• 10y BTP spreads are 3.0bp tighter this morning while other peripheral spreads are generally a bit tighter.
• Downside momentum has continued for gilts. Again there has been little new news but the increased hopes of a Brexit deal from earlier in the week are continuing to help gilt yields move higher.
• Moves in Bunds and Treasuries have been more muted, although Bunds had started to move higher after the open before retracing this move.
• European PMI data has largely been in line with expectations with the exception of a better than expected German manufacturing print. However, most of the commentary has been downbeat.
• TY1 futures are down -0-0+ today at 138-10 with 10y UST yields down -0.3bp at 0.854% and 2y yields down -0.2bp at 0.152%.
• Bund futures are up 0.07 today at 175.26 with 10y Bund yields down -0.1bp at -0.569% and Schatz yields down -0.4bp at -0.773%.
• Gilt futures are down -0.13 today at 135.24 with 10y yields up 1.3bp at 0.295% and 2y yields up 0.2bp at -0.30%.